Pidilite Industries increases focus on sales and distribution, invests more in brand building

Pidilite Industries Ltd has increased its focus on sales, distribution and innovation owing to a slowdown in the FMCG sector, a top official said.

The Fevicol maker has also been focusing more on brand building, and investing more behind its brands, Bharat Puri, Managing Director, Pidilite Industries, told BusinessLine on the sidelines of the Confederation of Indian Industry’s National FMCG Summit 2019 last week.

There has been no change in the basic strategy of the company, he added.

The growth in the FMCG industry tends to correlate with the GDP growth of the country, and if the GDP growth rate falls, so does the FMCG growth rate, Puri explained, talking about the current reduced growth rates in the FMCG sector.

For Pidilite Industries — which has products like adhesives, waterproofing solutions, sealants and polymers — raw material prices have been benign and hence, it hasn’t suffered a substantial hit on profits due to the slowdown, he added.

“We (Pidilite) have also still been growing at rates slightly above the GDP. Having said that, in times like this, frankly, what companies have to do is make sure that you double down on your brands, you get more out of your brands, you innovate faster, your sales and distribution initiatives become more aggressive, and you are far more visible and far more out there with speed and agility...That is what we are trying to do,” said Puri.

Rural focus

As a part of its increased focus on sales and distribution, the company has been undertaking new initiatives in small towns and rural areas. The rural growth for the FMCG sector dropped below urban growth for the first time in seven years, as per Nielsen’s India FMCG Growth Snapshot report on Q3 (July to September 2019).

“Rural has hit a seven-year low, but (for) companies like ours and for products like ours, there is still a scope to grow in rural,” said Puri. It is setting up more retail outlets in small villages, which also focus on educating people on Pidilite’s products. Rural areas contribute 30 per cent to the sales of the company.

The company also looks at a 10 per cent increase in retail outlets every year, he added.

Building the brand

Companies will have to keep focusing on brand building as it is during the time of a slowdown that brands which enjoy a great amount of goodwill will have to work harder for their respective companies, he explained.

Pidilite Industries is also doing the same as it has been putting more investments behind its brand building, said Puri, citing the example of the campaigns it undertook for its flagship brand Fevicol’s 60 years in the industry.

“For those of us who have been around long, we have seen enough slowdowns come and go. Frankly, (for) organisations, yes, you have to get tighter, you have to be more agile, you have to be more flexible, but your basics don't change- you have to continue to delight the consumer a little more than everybody else does,” said Puri.

Pidilite Industries’ objective is to continue to grow at between 1-1.5 times the GDP of the country, said Puri.